AT&T collected millions from taxpayers in fraudulent charges, US says

AT&T ignored abuse of the IP Relay call system intended for hearing-impaired …

AT&T improperly received millions of dollars from a government reimbursement fund by ignoring fraudulent use of the IP Relay call system provided free of charge to hearing- and speech-impaired US residents, the US government alleged this week.

"The United States brings this action to recover millions of dollars that have been paid to Defendant AT&T for its improper handling and billing of thousands of Internet Protocol Relay calls made by Nigerian and other international users seeking to defraud merchants in the United States," the US said in a complaint filed yesterday in US District Court in Western Pennsylvania.

The US government reimburses IP Relay providers $1.30 per minute, but calls originating outside the US and calls made by people without a hearing impairment are ineligible for reimbursement. IP Relay allows hearing-impaired users to place phone calls by typing messages into an Internet-based system. The messages are relayed to the intended recipient by assistants employed by AT&T and other providers. The FCC started requiring providers to verify the accuracy of each user's name and mailing address in 2009, but AT&T found a way to skirt the rules, the Justice Department said.

"The complaint alleges that, out of fears that fraudulent call volume would drop after the registration deadline, AT&T knowingly adopted a non-compliant registration system that did not verify whether the user was located within the United States," Justice officials said in a press release. "The complaint further contends that AT&T continued to employ this system even with the knowledge that it facilitated use of IP Relay by fraudulent foreign callers, which accounted for up to 95 percent of AT&T’s call volume. The government’s complaint alleges that AT&T improperly billed the TRS (Telecommunications Relay Services) Fund for reimbursement of these calls and received millions of dollars in federal payments as a result."

In a statement e-mailed to Ars, AT&T said it follows the FCC's rules. "AT&T has followed the FCC's rules for providing IP Relay services for disabled customers and for seeking reimbursement for those services," AT&T spokesperson Marty Richter said. "As the FCC is aware, it is always possible for an individual to misuse IP Relay services, just as someone can misuse the postal system or an email account, but FCC rules require that we complete all calls by customers who identify themselves as disabled." AT&T's statement did not say whether it verified the location of users as required by the government.

UPDATE: Bloomberg reports that the amount AT&T is accused of improperly charging to the federal government is $16 million. The government is seeking triple damages.

"As the FCC is aware, it is always possible for an individual to misuse IP Relay services, just as someone can misuse the postal system or an email account, but FCC rules require that we complete all calls by customers who identify themselves as disabled."

He should of added: "It is also always possible for a telephone company to misuse IP Relay services and profiting by knowingly allowing individuals to abuse the service. All we have to do is pass the buck and take the check. The FCC loophole requires us to take advantage of them."

They allow people to bill your business phone number with them without verifying if you have ever heard of that person or if that person is a legit business. You either have to pay the bill or lose your phone service.

You can always sue the person who billed your phone number, but this will take years, and you lose phone service in the mean time if you refused to pay.

I think they are the closest thing to an ultimately evil company the USA currently has.

There needs to be 'prison time' for Corporations. And the 'prison' needs to be takeover by the US government for a set period of time. The government takes over, cleans the management house and stops the evil from further propagating. After the company has completed their 'sentence', it is returned to the shareholders, minus the evil bleepards that were running it before.

Problem is, if AT&T is found guilty, it'll "pass those costs onto the consumer", because they're bastards.

They are certainly bastards, but the other specific reason they can get away with passing the costs on to customers is because it is expensive/difficult for customers to change vendors and their choices are limited. The telcos and data providers don't have a strict monopoly, but neither are they subject to the full pressure of a free market. They get away with what they do because their competition does the same crap and it is effectively impossible to spin up new competition.

So who's going to prison for fraud? Corporations are people, so let's, us, "we the people", bring charges against the defendant. Oh, right, corporations are only people when it suits them. I forgot.

Good thought. I'll vote for Romney if 'Corporations Are People' means he creates the first prison for corporations. Let's see, for your 5 year sentence, all your profits go to the US, your salaries are frozen and your executives have to wear ankle bracelets under house arrest and can't seek new employment. Your new cubicles are in Alcatraz and you're delisted, since no one wants your stock anyway.

I mean, if 'zero tolerance' works for drugs, let's double down on white collar crime with the zeal of self-righteous windbags.

I've said it before, I maintain it to be true and continue to be of the opinion... AT&T is THE most predatory of the TELECOM providers in this nation. The company would Eff its own grandmother with a baseball bat if they could turn a profit in doing so. Not saying I don't think others aren't also up to the same tricks but I'm glad AT&T got caught! A really solid smackdown should be the result. The reality is that after the lawyers all get paid their handsome sums, the settlement in like to be like a $1.49 and a "who's a naughty boy" scolding!

It's unfortunate too because I've learned to completely ignore those relay calls from "hearing impaired" individuals. At my last job where it happened quite frequently, and at my current shitty job where it's happened a handful of times, 100% of these calls are from people asking if we can ship thousands of dollars of computers to random places. Other than the fact that we never ever ship computers nor take credit cards over the phone, every one also wants an obviously fraudulent amount of computers. As in, other than local schools or companies, no one has ever wanted 6 MacBook Pros shipped to somewhere in Delaware or some shit (who in their right mind would want to pay hundreds in shipping charges when they could order from Amazon or other website or go to a local dealer?).

So, because of that, I never respond to any of these calls anymore and possibly have not spoken to a legitimately hearing impaired person. So it's a shame that AT&T has not only profited from it, but I imagine has caused others to lump all of these relay chats as instantly fraudulent to the detriment of those who actually require it.

As someone whose workplace has to deal with scam IP relay calls now and then, it really sickens me that there's no mechanism in place for me to try and report them. They're trying to scam the publication I work for, they're trying to scam our readers, and they're using stolen credit cards as the maggoty cherry on top.

While I hope AT&T is dealt with, they're only a side issue in this matter, at least to me.

I think they are the closest thing to an ultimately evil company the USA currently has.

Look, I used to work for AT&T, and they're indeed evil in that see-no-evil, hear-no-evil kind of deliberate ignorance. They wink while their reps slam customer accounts. They adopt strictly anti-consumer policies like data tiers and pretend they're solving a problem instead of gouging their customers. However, they don't hold a candle to the Haliburtons, Altrias, and Goldman Sachs of the world.

First of all, they don't have the competence to compete with that level of evil. If the Southern good ol' boys running AT&T hadn't lucked themselves into the middle of the mobile revolution, they'd be car salesmen. The company really is a mess, hell there isn't even a single AT&T. What you think of is AT&T is actually 10,000 little fiefdoms lorded over by menial supervisors and arrogant directors. Look to Verizon for a more competent, yet evil telco.

Second, because they can't directly cause the death of people, they'll never compete in the same league. Energy companies deliberately skimp on maintenance and cause thousands of deaths and billions of dollars of harm to people around the world. Cigarette companies literally kill EVERY ONE of their customers. Investment banks like Goldman actively scheme against retirement funds that pay them for advice. People starve when their pension check can't stretch.

I'm still waiting for my $60 refund from 2001 when I was overcharged for business adsl. At&t started to charge me for adsl internet and the adsl modem arrived 4 months later. I called the first month and told them that they didn't ship the modem. They told me we're sorry we'll credit you account and ship you the modem. Next month the account didn't show any credit and to add insult to injury there was a new charge for the current month and still no modem.

After months and months of charging my CC I finally got some of my money back but not all of it, so I'm here 11 years later waiting for my last $60.

Typical at&t dishonest practices. I left them in 2007 for TWC internet, TV and phone... never looked back.

In line with Starstuff. My DSL was a copper home run to CO. Converted it to fiber to RTU for higher speed. ISP leases lines from AT&T. When it was complete, the ISP tried to provision the circuit and couldn't. Turned out AT&T had converted me to one of their customers and wanted me to send them a letter before they "could change my ISP." Finally got a service tech to break the rules and convert me back.

To add insult to injury, they billed me for installation and a modem I didn't get (or want). Finally got that money back. Actually billed me for a month after "service was disconnected" which I also had to makego away.

If AT&T is being charged with fraud, why hasn't it been arrested and arraigned yet? Anyone else being charged with fraud would have to go through the shame of being pulled out of the back of a police vehicle shackled. Why is AT&T getting special treatment?!

If AT&T is being charged with fraud, why hasn't it been arrested and arraigned yet? Anyone else being charged with fraud would have to go through the shame of being pulled out of the back of a police vehicle shackled. Why is AT&T getting special treatment?!

Exactly. Any corp that is "too big to fail" and therefore punish needs to be broken down.

It usually went something like this:2-3 minutes of the relay operator explaining how things work.20 minutes of back and forth, trying to identify the item the person is looking for. The relay operator struggles with the user's spelling or language.and 10 minutes of me trying to wrangle complete and valid credit card information, along with a US shipping address that comes anywhere close to matching up with the credit card. (When the card's zip code is in Delaware and the item is going to a port city in Florida, you know it's fraud.)

So who's going to prison for fraud? Corporations are people, so let's, us, "we the people", bring charges against the defendant. Oh, right, corporations are only people when it suits them. I forgot.

Good thought. I'll vote for Romney if 'Corporations Are People' means he creates the first prison for corporations. Let's see, for your 5 year sentence, all your profits go to the US, your salaries are frozen and your executives have to wear ankle bracelets under house arrest and can't seek new employment. Your new cubicles are in Alcatraz and you're delisted, since no one wants your stock anyway.

I mean, if 'zero tolerance' works for drugs, let's double down on white collar crime with the zeal of self-righteous windbags.

I'm still waiting for my $60 refund from 2001 when I was overcharged for business adsl. At&t started to charge me for adsl internet and the adsl modem arrived 4 months later. I called the first month and told them that they didn't ship the modem. They told me we're sorry we'll credit you account and ship you the modem. Next month the account didn't show any credit and to add insult to injury there was a new charge for the current month and still no modem.

After months and months of charging my CC I finally got some of my money back but not all of it, so I'm here 11 years later waiting for my last $60.

Typical at&t dishonest practices. I left them in 2007 for TWC internet, TV and phone... never looked back.

Funny, I had a similar experience with ATT years ago. The NY Public Service Commission made them pay me $100 for refusing to resolve a fraudulent bill, and when the same situation happened the next month, they made them pay me another $100. I threw my ATT-branded phone in the trash and they'll never get another dime from me. I'd rather communicate with cups and string.

It seems to me that back in the old days, the telcos were all robber barrons. Now, it seems like they've all reformed except ATT, the last holdout.

I think the FCC should fine AT&T a multiple of the income earned from these calls plus interest and compensatory damages followed by the SEC fining them for essentially fudging their bottom line. The board and all executives should be held to personal account as well for allowing this to occur and have criminal charges brought against them along with fines and compensatory damages. Anything over and above the amount, plus interest, owed back to the government should be returned as credits, plus interest, to AT&T subscribers. The icing would be if the government also disallowed AT&T from seeking reimbursement from the government for a number of years for IP Relay Calls.

Anyone see AT&T's stock drop? Obviously investors think AT&T is to large for the government to really hurt it otherwise it probably would have been an even greater price drop.

I would also like to know why no one in the FCC ever realized that AT&T was not in full compliance until now? Who dropped the ball at the FCC? Whats their punishment?

There should be a simple and reasonable penalty system in place for this kind of willful theft, perhaps a $150,000 per incident damages award? I tried to figure up the total judgement, but my calculator says "ERROR".

Good thought. I'll vote for Romney if 'Corporations Are People' means he creates the first prison for corporations. Let's see, for your 5 year sentence, all your profits go to the US, your salaries are frozen and your executives have to wear ankle bracelets under house arrest and can't seek new employment. Your new cubicles are in Alcatraz and you're delisted, since no one wants your stock anyway.

I mean, if 'zero tolerance' works for drugs, let's double down on white collar crime with the zeal of self-righteous windbags.

I absolutely love your idea! Lets do this!

I'm trying to determine if this is extraordinarily sarcastic or not. My sarcasm meter seems to be on the fritz this morning. I like the punishment idea but using a politician who's almost as evil as the perp seems counter productive.

It usually went something like this:2-3 minutes of the relay operator explaining how things work.20 minutes of back and forth, trying to identify the item the person is looking for. The relay operator struggles with the user's spelling or language.and 10 minutes of me trying to wrangle complete and valid credit card information, along with a US shipping address that comes anywhere close to matching up with the credit card. (When the card's zip code is in Delaware and the item is going to a port city in Florida, you know it's fraud.)

I shudder to think that my taxes paid the $40 for that phone call.

I previously worked for an online retailer, and every single call we received that was a IP relay call was fraudulent. Every. Single. One.

However, instead of a port city in Florida, it would typically be Jamaica, NY. (In fact, we ended up not EVER accepting an order billing to or shipping to Jamaica, NY. I remember explaining this to someone that even seemed legit, and he didn't argue with our stance. *laughs*)

If these charges are true, how can AT&T remain a legitimate entity in our country? Not only potentially did the taxpayer get defrauded, but also companies targeted by the scams. I don't think fining the company is the right solution, fines just get rolled into the cost of service that we ultimately end up paying, not the company or shareholder. If ordinary people did this on this scale, they would go to jail. AT&T needs to be restructured with possible government takeover for a certain period of time to clean it up.

The fundamental problem is that there is very little competition for AT&T.

This is NOT the fundamental problem. ATT is in a business where substantial competition is not practical.The FUNDAMENTAL problem is that the US government (and the US population) are unwilling to accept the reality of this fact and deal with it.